ACME Founder M K Upadhyay talks about what helped the company win the bidding for the 750 Mw Rewa Ultra Mega Solar Project at a historic low tariff of sub-Rs 3 per unit and the strategy to develop the project at the highly competitive tariff.Sudheer Singh | ETEnergyWorld | March 02, 2017, 12:10 IST

The Indian renewable energy growth story has just witnessed a revolution of sorts with the MP-based Rewa Utra Mega Solar power plant being awarded at sub Rs 3 per unit tariffs to three firms including ACME Cleantech Solutions. In an exclusive interview with Sudheer Pal Singh, Manoj Kumar Upadhyay, Founder and Chairman of the company shares a perspective on what made ACME score over competitors and the company’s larger growth plans.

How would the bidding for the Rewa project impact the renewable energy sector?The results of the bidding for the Rewa project have created a win-win situation for all the stakeholders in the Indian renewable energy sector. It has established a robust process of tariff-based bidding and has set the roadmap for a further optimization of cost per unit tariff. The path-breaking tariff discovery is most competitive and a very positive development. With this, we expect an exponential growth in coming days for the renewable energy industry.

What according to you were the key differentiators for ACME in the bidding?The ACME Group’s core competence lies in technology, innovation and execution ability. Also, we have a plant already operational for the past more than three years. We have gained a lot of good quality operational data from that experience which helped us in avoiding unreasonable assumptions in the bid. That experience gave us an idea of how close we can be to the ground reality of operations while putting in the bid without comprising on quality.

Given the extremely competitive nature of the tariff, how confident are you of successfully developing the project on time and generating comfortable returns?We are very confident. At the ground level, the success of the project depends on factors like level of physical preparedness and transmission and distribution infrastructure. There is no construction risk associated here as the state government has already acquired land which is fully earmarked for the developers to begin work. There are three different blocks earmarked separately for the three project units. Also, another major requirement for any development of this kind is sub-stations. Here, the substation is already ready. So, the technical aspects of construction can kick-off quickly.

There is a view that an ongoing slump in the module prices globally is helping firms to quote aggressively. Eventually, quality will suffer and market consolidation will happen. Do you agree such a risk exists?If a developer is bidding based only on assumptions of total project cost, he is exposed to this risk. All developers are exposed to variations in costs like panel prices. But if you are a fully integrated company, you stand protected because of a lot of other factors. So, if you are bidding based on operational excellence, the same plant will be able to generate extra capacity utilization. That gives you the confidence to work.

Confidence apart, what is the larger strategy to minimize risks and develop the project safely?There are three components to the success strategy – cost of project, operational performance of the project and optimum financing of the project. A developer would be at risk if he has only one of these levers to play. We have taken into account all the three levers in our estimates and, therefore, we are safe. We have constructed more than 700 Megawatt capacity which is operational. We are not a first time developer. It is not as if tariff has come down due to unreasonable aggressive assumptions.

According to a view, many companies bidding aggressively for solar projects are working on a simple model of being EPC light with unhedged foreign currency loans.Our model is not that of a financial investor-driven business. We work on a utility mind-set model where all the aspects of project design, set up, commissioning and operations are taken into account. Where ever we have opted for External Commercial Borrowings (ECBs), we have hedged it completely for the entire duration. Our business is to generate maximum revenue out of the operations of the project.

Finally, can you share an estimate of the total cost of this project and other financial and expected operational details?The project cost of setting up 250 MW solar PV plant will be between INR 1200-1400 Crore. The debt portion will be around 75% of the project cost. In fact, we have started receiving a lot of interest from lenders as the project comes with one of the best rated Power Purchase Agreement (PPA). As per the tender condition, 5 MW to be commissioned within the first 8 months and the remaining capacity can be commissioned within 18 months.

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